Moody’s Investors Service has downgraded Chicago’s debt rating, citing its overwhelming pension burden. Moody’s dropped the city’s rating to Baa2.
A rating of Baa2 is eight notches below the highest debt rating of Aaa.
Moody’s said in its statement its outlook for the city remains negative. A drop of two more notches would make mean the city’s bonds would become“junk” bonds.
“We strongly disagree with Moody’s decision to reduce the city’s credit rating and would note that Moody’s has been consistently and substantially out of step with the other rating agencies, ignoring the progress that has been achieved,” a spokeswoman for Mayor Rahm Emanuel, Kelley Quinn, said in a statement.
Chicago has more than $8 billion in taxpayer-backed general obligation debt, as well as roughly $800 million in additional bonds backed by sales tax and motor fuel tax revenues.